The Fox News Panel on Friday discussed the $2 billion loan to Petrobras, focusing on the Soros connection and on the hypocrisy of drilling offshore near Brazil and not off the United States. I think the Soros issue is a big fat nothing (he was buying the sector), but Charles Krauthammer nails the hypocrisy:
KRAUTHAMMER: the Ex-Im bank spokesman said it is all about American jobs. If it’s all about American jobs, the payoff for drilling offshore in America is a lot higher. And if you’re subsidizing or underwriting drilling offshore in Brazil, then you’re completely undermining the reason to prohibit drilling offshore in the U.S.
The reason Obama opposes it and the reason the liberals oppose it is because of the environment. But by not drilling here, we simply end up have the drilling end up elsewhere, and it doesn’t reduce pollution on the planet. It simply exports it into poorer countries where the safeguards are much less, for example, in Nigeria, where there are oil spills and siphoning and explosions all the time.
So the net effect on the planet of drilling elsewhere instead of here is that there is more pollution and despoiling of the environment, and it reduces American jobs. It makes no sense at all.
BAIER: How do you say drill baby drill in Brazil?
Note to Brett: It’s funnier when you say, “How Do You Say, ‘Drill, Baby, Drill!’ in Portuguese?”
Fred Barnes had a particularly odd comment, however:
BARNES: There you go. They say it is not with the taxpayers’ money. Look, they have to get the money somewhere, and they borrow it, and the government gives the loan guarantee, and they give it to this Brazilian oil company.
Where does the money come from? What if they renege on the loan? Well, the federal government pays for it.
As IBD pointed out in the link mentioned above, it’s a good loan to make:
First, the U.S. money is a loan, and Brazil has excellent credit with an investment-grade BBB sovereign rating and a record of responsible borrowing. Whatever we loan the Brazilians will be paid back on time and with interest.
Second, the cash will encourage Brazil’s state oil company, Petrobras, to contract with American businesses. And we aren’t just talking about oil companies, but software, steel, research, environmental impact and engineering concerns, to name a few others.
Third, drilling new offshore discoveries in Brazil’s Tupi field is an epic project in its own right. Cutting through 10 miles of ultrahard salt amid wild temperature fluctuations to extract as much as 40 billion barrels of oil, maybe more, is a grand project.
It will create technological breakthroughs not seen since the space program, and qualifies as a great engineering feat. Along with the 1,712-mile natural gas pipeline to be constructed from Alaska to the lower 48, it ought to stir America’s imagination to continue to break new frontiers.
When the strategic factors are brought into place, the benefits become very obvious.
President Obama may be hypocritical, but it’s good policy.